Losing your spouse is a painful, confusing time, but add to that repeated calls from an aggressive debt collector, and a bad situation suddenly can get even worse. Before you cave into the pressure, take a moment to catch your breath and learn the facts about your rights and responsibilities. You may be off the hook as some debts — including even certain types of credit card charges — are forgiven at death. However, others linger much longer.
First off, you should know that you are generally not personally responsible for paying off your husband's debts, as any loans would normally be paid off by his estate. This includes credit card debt, student loans, car loans, mortgages and business loans.
According to Marc Zimmerman, trust and estate planning attorney with the Law Offices of Michael A. Zimmerman, "When your husband dies owing a debt, the debt does not go away. Generally, the estate is liable for paying any outstanding debts, and, the named personal representative, executor or administrator will pay debts owed from the money in the estate, not from their own money or that of the surviving spouse. However, if the surviving spouse inherits certain assets from the deceased spouse through beneficiary designations or joint account ownership, and the estate assets are insufficient to satisfy the creditor claims, the creditors could attempt to make claims against those assets that pass directly to the surviving spouse outside of the probate estate.”
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That being said, you may be responsible for certain types of debts. For example, if the debt is jointly owned or you have co-signed a loan, you are obligated to continue to pay this debt. This occurs most often with credit cards, car loans or mortgages. Some states also require you to pay off any medical bills that your spouse incurred before their death.
The State You Live in Can Make a Big Difference
It is essential to understand the laws of your state so that you know where you stand concerning all debts, as some community property states hold you responsible for the debt even if it is not in your name. Community property laws make both spouses equally liable for debts incurred after the marriage has taken place.
There are currently nine community-property states:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
A Word about Credit Cards
It is important to note that there is a distinction between joint account holders and authorized users with credit card debts. As a joint account holder, you would need to continue to pay off the credit card (no matter what state you live in) because you and your spouse are both considered owners of the account. That means you share equally in the ownership of any charges that are on the card.
On the other hand, authorized user status means that you have charging privileges on your spouse’s card, but you are not considered an account owner. So, if your spouse were to pass away, you wouldn’t be responsible for paying the debt they incurred as an authorized user. The exception would be if you lived in a community-property state, which requires the surviving spouse to pay off all debts, including those in just her husband's name.
Does Not Paying His Debt Impact My Credit Score?
Generally, your credit score would not be hurt by any of your spouse’s outstanding loans that you are not required to repay. According to Davon Barrett, who is a CERTIFIED FINANCIAL PLANNER™ professional specializing in working with widows at Francis Financial, "If the debt is solely in the name of your husband, the debt collector should not report any late or non-payment to the credit bureaus in your name." The exceptions to this will be if you are a joint account owner, co-signer or reside in one of the nine community-property states listed above.
Barrett cautions widows, "Some debt collectors are inappropriately aggressive. For example, if the debt collector insists that you are responsible for the account balance, but you believe you are not, you may request that the collector provide evidence."
Talking to an estate-planning attorney can help you understand under which circumstances you have an obligation to pay and when you do not. Zimmerman shares that “the best way to find an experienced estate planning attorney is to get a referral from another attorney, financial adviser or accountant whom you know. This professional should be able to introduce you to an excellent trust and estate planning attorney who specializes in this area of the law.”
Plan appropriately and include this in your financial plan. Consider talking to a financial adviser about how debt might affect your overall financial plan and goals. If you don’t have a financial adviser yet, finding one is not difficult. Reach out to your friends and family for a referral to a fee-only, fiduciary, independent financial adviser.
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